Whether young or old, any couple entering into marriage is not usually thinking about its downfall. Likewise, most couples are not going to scrutinize debt until it is time to divorce. When the end is near, one of the most contentious issues involve individual or mutually accrued debts. It can be complicated to divide medical, credit card, mortgages or other personal debts, regardless of who was initially responsible. Unfortunately, for some parties, the debt division process can be even more complicated if a former spouse fails to follow through on agreements made in a divorce decree or settlement. Creditors do not have to honor a divorce decree if both parties signed an original loan contract or shared a joint account.
To protect your rights when dividing debts, it is important to have a clear understanding of your rights and options. There are some steps you can take in advance to improve the chances of a clean break from marital debts. Our Birmingham divorce attorneys are dedicated to protecting the rights of our clients who are divorcing. In addition to providing sound counsel and advocacy, we are dedicated to raising awareness of the potential pitfalls that can impact clients before, during and after a divorce. Knowing the law and your rights will help you when negotiating the terms of a divorce and allow you to better secure future financial footing.
Creditors have no obligation to consider your divorce decree when pursuing unpaid debts. If you shared credit cards, both parties are liable to ensure that debts are paid. Since creditors were not parties to the divorce, they are not legally responsible for knowing or following the terms of your agreement. Even if you put in your decree that your spouse will pay debt, creditors can still send you the bill if your spouse fails to pay up.
When you are considering or entering the divorce process, you should eliminate future shared expenses. Figure out which accounts belong to you and which belong to your spouse. You can remove authorized users as soon as possible to prevent a spouse from running up credit card debt. If you have joint accounts, you can put a freeze or hold on the account so that no more purchases are made. This will ensure that neither party runs up a tab before debts are paid.
The best action to take is to settle any joint debts as soon as possible. In the best case scenario, parties can pay off debts before the divorce is finalized. Using marital cash or savings to pay off debts can make it easier later on. Many couples will use proceeds from a family home to pay off any outstanding credit card debt. To make sure your name is removed from any account, you should comb through the details of your credit report. Also make sure that your spouse is not an authorized user on your account. One way to ensure that debts are paid by responsible parties is to transfer the balance to an individual account. An experienced divorce attorney should also include a provision in the settlement that debts are not dischargeable through bankruptcy to prevent being kept on the hook.
If you are seeking a divorce in Birmingham, contact Family Law Attorney Steven Eversole at (866) 831-5292.